Hold Your Horses (The Horses That Have Billions of Dollars to Finance Your Projects)
Image Source Construction in Dubai comes to screeching halt.
As a student of Architecture, Dubai tends to be the focus of discussion when fantasy worlds and rapid growth are the topics of conversation. Smack in the middle of a recession, it is incredibly difficult to find work in the field of Architecture. Just the other day, I was even denied the opportunity to work for free. There is just no work out there. But for some reason, Dubai was the polar opposite. While highly established firms are struggling to stay afloat here in the States, Dubai is booming with development; actually creating islands that can float on their own. However, reality has come knocking at those brand new doors and it turns out, companies once scrambling to keep up with the rigorous schedules backed with billions of dollars are now having trouble staying out of debt and keeping those doors open.
BBC News offers this:
- Reports major debt problems
- Government-owned companies (like Dubai World) requesting extensions for loans
- Banks suffering
- Stocks plummeting
- Dubai official states “decisive action” needs to be taken
- “After six years of rapid growth, the reputation of Dubai’s economy is now being questioned.”
The New York Times had this to offer:
- Of all economies encountering debt problems “Dubai stood out.”
- Developments hoped to “entice celebrities” to invest
- Assumption made that “Abu Dhabi would bail out Dubai.”
- “Fear that Dubai might not be able to pay its bills”
- Dow Jones down more than 150 points
- $130 billion of debt for foreign banks, only $13 billion for United States banks
- Largest creditors are domestic banks
Times Online said:
- “Fears of a dangerous new phase in the economic crisis swept around the globe yesterday [November 26, 2009] as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.”
- Shares plunged
- Traders transferred funds, insurance rates skyrocketed
- Claims $80 billion debt is “comparatively modest”
- Dubai World unable to pay interest payments
The Onion, a satirical newspaper, has managed to poke fun at the situation, coming unfortunately close to the truth.
CNN World furthers this absurdity by covering the opening of the world’s tallest tower in the midst of this debt crisis.
Even tycoons like Donald Trump have been forced to “[hit the] pause button." (L E A P)
The problem, in essence, is very similar to individuals encountering credit card debt. Subconsciously, people don’t realize how much money they are spending. The numbers are floating; they are all virtual, all plastic. Dubai began spending at an alarming rate, and banks trusted that their billion dollar investments would return sizable profits. The problem here is that designers and investors alike got caught up in the fantasy worlds of Dubai, with their floating islands and Disney-like castles, without realizing the financial implications. Dubai and its financial resources are not sustainable. Construction has come to a complete stop until the finances can be restored. Many have come to the realization without the means of paying off their debts. So they run. “Some people have concluded that their only option is to cut their losses, book a flight, accept that they are never coming back and leave without paying their debts” (The Knowledge). Some are resorting to sites like GetOutOfDebt.org with little or no success.
In attempts to make a sizable dent in their bills, “[d]ebt-laden Dubai offers to host U.N. headquarters;” in hopes that this will stir profits and sponsorships (Reuters). Similarly to how hosts of the Olympics games tend to prosper from the attention, Dubai hopes to attract the same kind of attention.
Image Source Construction in Dubai comes to screeching halt.
As a student of Architecture, Dubai tends to be the focus of discussion when fantasy worlds and rapid growth are the topics of conversation. Smack in the middle of a recession, it is incredibly difficult to find work in the field of Architecture. Just the other day, I was even denied the opportunity to work for free. There is just no work out there. But for some reason, Dubai was the polar opposite. While highly established firms are struggling to stay afloat here in the States, Dubai is booming with development; actually creating islands that can float on their own. However, reality has come knocking at those brand new doors and it turns out, companies once scrambling to keep up with the rigorous schedules backed with billions of dollars are now having trouble staying out of debt and keeping those doors open.
BBC News offers this:
- Reports major debt problems
- Government-owned companies (like Dubai World) requesting extensions for loans
- Banks suffering
- Stocks plummeting
- Dubai official states “decisive action” needs to be taken
- “After six years of rapid growth, the reputation of Dubai’s economy is now being questioned.”
The New York Times had this to offer:
- Of all economies encountering debt problems “Dubai stood out.”
- Developments hoped to “entice celebrities” to invest
- Assumption made that “Abu Dhabi would bail out Dubai.”
- “Fear that Dubai might not be able to pay its bills”
- Dow Jones down more than 150 points
- $130 billion of debt for foreign banks, only $13 billion for United States banks
- Largest creditors are domestic banks
Times Online said:
- “Fears of a dangerous new phase in the economic crisis swept around the globe yesterday [November 26, 2009] as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.”
- Shares plunged
- Traders transferred funds, insurance rates skyrocketed
- Claims $80 billion debt is “comparatively modest”
- Dubai World unable to pay interest payments
The Onion, a satirical newspaper, has managed to poke fun at the situation, coming unfortunately close to the truth.
CNN World furthers this absurdity by covering the opening of the world’s tallest tower in the midst of this debt crisis.
Even tycoons like Donald Trump have been forced to “[hit the] pause button." (L E A P)
The problem, in essence, is very similar to individuals encountering credit card debt. Subconsciously, people don’t realize how much money they are spending. The numbers are floating; they are all virtual, all plastic. Dubai began spending at an alarming rate, and banks trusted that their billion dollar investments would return sizable profits. The problem here is that designers and investors alike got caught up in the fantasy worlds of Dubai, with their floating islands and Disney-like castles, without realizing the financial implications. Dubai and its financial resources are not sustainable. Construction has come to a complete stop until the finances can be restored. Many have come to the realization without the means of paying off their debts. So they run. “Some people have concluded that their only option is to cut their losses, book a flight, accept that they are never coming back and leave without paying their debts” (The Knowledge). Some are resorting to sites like GetOutOfDebt.org with little or no success.
In attempts to make a sizable dent in their bills, “[d]ebt-laden Dubai offers to host U.N. headquarters;” in hopes that this will stir profits and sponsorships (Reuters ). Similarly to how hosts of the Olympics games tend to prosper from the attention, Dubai hopes to attract the same kind of attention.
Bibliography:
"Debt-hit Dubai opens world's tallest tower." CNN World (2010): n. pag. Web. 5 Feb 2010. <http://www.cnn.com/2010/WORLD/meast/01/04/dubai.burj/index.html>.
"Debt-laden Dubai offers to host U.N. headquarters." Reuters (2010): n. pag. Web. 5 Feb 2010. <http://www.reuters.com/article/idUSTRE60E1C520100115>.
"Dubai Debt Crisis Halts Building Of World's Largest Indoor Mountain Range." Onion (2010): n. pag. Web. 5 Feb 2010. <http://www.theonion.com/content/news/dubai_debt_crisis_halts_building>.
"Dubai Debt Woes Raise Fear of Wider Problem ." New York Times (2009): n. pag. Web. 5 Feb 2010. <http://www.nytimes.com/2009/11/28/business/global/28dubai.html?_r=1>.
"Dubai in deep water as ripples from debt crisis spread." Times Online (2009): n. pag. Web. 5 Feb 2010. <http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6934261.ece>.
"Dubious Dubai Hits Pause Button." L E A P (2009): n. pag. Web. 4 Feb 2010. <http://ibmblalab.blogspot.com/2009/01/dubious-dubai-hits-pause-button.html>.
"I’m in Debt in Dubai. – Matthew." How To Get Out Of Debt - Free Help (2009): n. pag. Web. 5 Feb 2010. <http://getoutofdebt.org/7368/im-in-debt-in-dubai-matthew>.
Lawrence, Jeremy. "Time Out Dubai." Knowledge (2009): n. pag. Web. 5 Feb 2010. <http://www.timeoutdubai.com/knowledge/features/6433-debt-in-dubai>.
"Shares hit by Dubai debt problems ." BBC News (2009): n. pag. Web. 5 Feb 2010. <http://news.bbc.co.uk/2/hi/business/8381258.stm>.